BlaBlaCar Comes To India Amidst Rising Competition

Taxis and other road traffic pass a broken down vehicle on a tarmac road in Dakar, Senegal, on Monday, Jan. 12, 2015. Dakar, with 3 million residents according to the CIA Factbook, is Senegal's largest city, economic hub and the business gateway to West Africa. Photographer: Pau Barrena/Bloomberg via Getty Images

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Blablacar, an online marketplace for city-to-city rides, is now coming to India. The company raised a massive $100 million last summer, and has expanded to multiple countries in twelve countries in Europe, including Turkey and Russia.

The announcement yesterday came at a time when taxi aggregators have faced government action for services that run within the city after a women was raped by a Uber cab driver in December. But unlike the aggregators, city-to-city carpooling services are not covered by new regulations that require a radio taxi license. This means that Paris-based BlaBlaCar can start right away. Raghav Gupta, country manager for BlaBlaCar, said that detailed discussions on security of travellers have been held with authorities.

For companies like BlaBlaCars, India presents a great opportunity. Currently, buses and trains are the primary means of city-to-city transport, and both are inefficient. Through BlaBlaCar, riders can choose a destination and connect with a driver who is going there. Riders pay and drivers get paid for each ride. This process is similar to that followed by Ola Cabs or Uber. Typically BlaBlaCars takes a 10 percent cut.

The service will be free for riders to begin with. "Car-owners will be able to offer seats to co-travellers, so they can travel together and share fuel costs,” said Nicholas Brusson, co-founder of BlaBlaCar. Initially, we’ll not charge anything from users. This will remain be a free service until we reach a scale and educate people about our service,” said Brusson. The company followed a similar model in Europe when it launched.

CEO Frédéric Mazzella will be hoping to tap a vast community of people who would like to have more timely and comfortable rides for cheap between cities. In India, similar services exist in the form of RidingO, SmartMumbaikar and ZingHopper, but BlaBlaCar has deeper resources to tap into. Last July, the company raised $100 million in funding from investors such as Accel Partners and Index Ventures. In India, it might choose to expand nationwide in major cities at one go, and as per regulations won't need an Indian partner. In marketplace businesses, 100 percent foreign investment is permitted.

The expansion might also be challenging as this is the first time Mazzella will be dealing with a geography outside Europe, where infrastructure is more modern and efficient. The next expansion might happen in Brazil, by the company's own plans, where they might be able to use lessons learnt in India. “We have to take what’s proven successful in the countries we are, and go to the next level," Mazzella had said at Disrupt Europe event.

Another challenge will be convincing passengers to spend several hours in a car with a stranger. While the company might have tracking systems to take care of security, the experience itself is alien to most Indians. Even in Europe, where sharing is a norm in countries such as Germany, BlaBlaCars has faced the same issue as it expands.

Competition in India is rising because taxi aggregators such as Ola and TaxiForSure are also expanding their operations to rides between cities. These players have tasted success in city cab operations already and are more familiar with Indian regulations and local rules. But they are currently busy with new regulations that pose a threat to their existing business models.